Tuesday, July 30, 2013

Josh's Cookie Business

An example of natural consequences-

Josh and his neighbor friend wanted to make some money, so they decided to sell cookies. Josh and I went to the store to research prices of each ingredient, then came home to do the math on how much each batch cost us.

Me- Okay, we know how much each recipe batch costs, but since you're selling by the dozen we need to make the cookies to see how many each batch yields. Don't go around telling people prices until we know how many dozen are in each batch.
Josh- Alright.

.... He goes off to play while I mix the cookie dough. We'd agreed on this arrangement. Later both boys come back inside.

Me- Alright, each batch made 3 dozen, so each dozen is costing you $2.33. You'll want to charge a percentage over that cost. That is your profit margin.
Josh-- Uh....Well, we already told everyone each dozen was going to cost $2.
Me- Why did you do that? I'd specifically asked you not to do that.
Josh- Well, we were just anxious to get the money so we went to all the customers and let them know we'd deliver today.
Me- You could let them know your mistake when you receive payment and see if they're willing to pay more.
Josh- Well...
Me- Did you already get money too?
Josh- Yes.
Me- Where is it?
Josh- In our pockets.
Me- Well, you owe me $2.33 for each dozen ordered for the cost of ingredients, so you can go ahead and hand me the money you have. You will need to honor your price to the customers who have already paid also. So basically you've lost money today.
Josh- *sighing, handing over cash* Alright.

Word quickly spread through the neighborhood kid network on what had happened, and 3 of his 5 customers gave him a couple extra dollars. He paid up the $11.65 for the ingredients without any fuss